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UPDATE 2-Private equity firms offer to buy Shawbrook bank in $1 billion deal
March 3, 2017 / 5:58 PM / 9 months ago

UPDATE 2-Private equity firms offer to buy Shawbrook bank in $1 billion deal

(Updates March 3 story to add reason for CFO’s departure from Shawbrook)

By Lawrence White and Anjuli Davies

LONDON, March 3 (Reuters) - British bank Shawbrook Group Plc said on Friday it has received a joint offer from two private equity firms to buy the lender less than two years since it went public, in a deal worth 825 million pounds ($1 billion).

Pollen Street Capital, which already owns 38.9 percent of Shawbrook, together with BC Partners have offered shareholders 330 pence per ordinary share in cash and any final dividend due for 2016, the bank said in a statement.

The shares jumped 18 percent to 316.5 pence on Friday.

The offer is pitched at a 22 percent premium to Thursday’s closing share price.

Britain’s so-called challenger banks have been increasingly seen as ripe for takeovers in recent months, bankers who advise on mergers and acquisitions have said, as a prolonged period of low interest rates has squeezed earnings and the pound’s fall has made them cheaper for foreign buyers.

Co-Operative Bank, rescued from the brink of collapse by a group of hedge funds in 2013, put itself up for sale last month after struggling to meet regulatory capital requirements.

Shawbrook, which was founded in 2011, listed in April 2015 at 290 pence a share but has been trading below that price in recent months.

In June last year it booked an additional impairment charge due to some irregularities in its asset finance business, sending its share price to a record low.

“We believe that Shawbrook continues to suffer an unwarranted discount in the aftermath of the 9 million pound impairment charge taken by its asset finance business in Q2 2016,” Ian Gordon, analyst at Investec wrote in February.

It has also seen several changes in its senior management.

Chief Financial Officer Tom Wood resigned last June, with Dylan Minto taking over the role. Wood said his departure was because he wanted to spend more time with his family.

In 2015 Richard Pyman stood down as the bank’s CEO due to illness, and was replaced by Steve Pateman.

“In its short history as a listed company, Shawbrook has suffered from a disproportionate amount of ‘management churn,” Gordon wrote.

The bank, with a 75 percent exposure to small and medium sized firms (SMEs) lending, said in November that demand from SMEs was lower than the previous year but that it had seen continued demand for property finance and consumer loans.

Shawbrook is being advised by Goldman Sachs and is due to report full-year results on March 7. ($1 = 0.8167 pounds) (Additional reporting By Andrew MacAskill; Editing by Rachel Armstrong/Keith Weir)

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